Agricultural Subsidies and Negotiations: Strategies and Options

The implementation experience of the Uruguay Round (UR) indicates that the Agreement on Agriculture (AoA) was unable to curb the widespread use of domestic farm subsidies by developed countries.This paper analyses the provisions of Annex A of the July Framework and shows that, by itself, the July Package will not lead to any real decrease in the domestic levels of subsidies in developed countries. This paper points out that there are some waivers built into the Framework, which may allow developed countries to maintain and, in some cases, even to increase domestic farm support and still remain WTO-consistent. However, in most cases, the July Framework only provides broad guidelines and leaves the specific modalities of subsidy reduction to be decided through negotiations. It will be possible for negotiators to plug some of these loopholes if appropriate subsidy reduction formulae are used. This forms the crux of the current phase of negotiations on domestic subsidies. [CENTAD Hong Kong Series- 2]